TLDR
- South Korea’s Kospi has risen more than 22% from its July 30 low, crossing into bull market territory
- Samsung Electronics and SK Hynix each jumped more than 5% on Thursday, leading the benchmark higher
- KB Securities analyst Jeff Kim says both stocks are “extremely undervalued” after falling more than 40% from their peaks
- Strong AI spending from Big Tech firms has restored confidence in memory chip demand
- Foreign investors remain net sellers, having pulled more than $100 billion from Korean shares this year
Samsung Electronics and SK Hynix have surged back into focus after a brutal July selloff, with one analyst calling both stocks “extremely undervalued” as South Korea’s main stock index entered bull market territory.
Samsung Electronics Co., Ltd., SMSD.L
South Korea’s Kospi rose as much as 4.8% on Thursday, bringing its total gain from a July 30 low to around 22%. That crosses the threshold commonly used to define a bull market.
The recovery has been fast. Just last month, the Kospi fell 22% in its worst monthly performance since the global financial crisis. The drop was caused by forced liquidations of leveraged bets on chipmaker stocks.
Samsung Electronics and SK Hynix led Thursday’s gains, each climbing more than 5%. Both are major producers of memory chips, which are in high demand as AI adoption grows.
Analyst Sees Deep Value in Both Stocks
KB Securities analyst Jeff Kim said both stocks are trading at valuations that do not reflect their earnings outlook. Based on Wednesday’s close, Samsung Electronics trades at 3.7x its 2027 estimated price-to-earnings ratio, and SK Hynix at 3.2x.
Analysts forecast 2027 operating profit for Samsung at 575 trillion won and SK Hynix at 389 trillion won. Those figures are 13.2x and 8.2x their 2025 levels, respectively.
Kim said the gap between projected earnings growth and current valuations points to room for re-rating. He added that upcoming shareholder return policies at both companies could also drive share prices higher.
Samsung’s shareholder returns over the next three years are expected to total at least 600 trillion won, with a dividend yield above 7%.
Near-term earnings are also expected to be strong. Samsung is projected to post third-quarter 2026 operating profit of 112 trillion won, up 817% year-over-year. SK Hynix is expected to post 77 trillion won, up 579% year-over-year.
Both companies have committed more than 60% of their output to five-year long-term agreements with hyperscalers as memory prices rise.
Risks Still Linger
Despite the rally, analysts are cautious. The Kospi is still around 24% below its late June peak.
Foreign investors have pulled more than $100 billion from Korean shares this year. Some overseas funds have started returning, drawn by lower valuations.
A soft US inflation report released Wednesday also helped sentiment by easing fears about Federal Reserve rate hikes.
South Korea’s equity market remains heavily concentrated in semiconductor companies. Analysts warn that makes it vulnerable to any shift in AI spending sentiment.
Regulators have taken steps to reduce forced selling, including curbing single-stock leveraged ETFs and tightening margin requirements.
Analysts say investors should not expect the same pace of gains going forward.
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